California School-Finance Lawsuit Returns to Court

Palo Alto, Calif--In 1967, John Serrano Sr. was told by his son's
school principal that the boy, then 6 years old, was considered nearly
gifted, but could receive a decent education only if the family moved
out of East Los Angeles to a wealthier school district.

Mr. Serrano moved his family to the suburb of Whittier, but remained
upset enough about the incident to file, the following year, the
landmark court challenge that spurred similar litigation seeking
school-finance reform in two dozen other states.

Today, John Serrano Jr. is a working adult, but the lawsuit
survives. The third and perhaps final chapter of Serrano v. Priest is
proceeding almost unnoticed in a Los Angeles courtroom.

The original decision in Serrano, upheld by the California Supreme
Court in 1974, declared that the state's system of paying for public
education, based primarily on property taxes, was unconstitutional. In
1976, the state supreme court affirmed its earlier decision and gave
the legislature six years to equalize--within $100--the amount spent on
each pupil, regardless of where in the state he or she lived.

The six-year period is up, and the plaintiffs are back in Superior
Court for what is informally being described as a compliance
hearing.

Related Suit

The plaintiffs' lawyers are also pressing a second, related suit,
Gonzalez v. Riles, which is being tried together with Serrano III.

Much has changed since 1976. Owing both to the Serrano decisions and
to the enactment of Proposition 13 in 1978, the state's share of
support for schools has doubled.

By last year, the state was supplying about 82 percent of all the
money, exclusive of federal aid, spent on California schools. And
Proposition 13 virtually eliminated property taxes as a source of funds
for education.

But the growth in state support tells only part of the story, the
plaintiffs contend. They argue, in general, that many disadvantaged
children are still denied equal educational opportunity because the
state has not done enough to close the gap between what so-called
"high-wealth" districts spend and what poorer districts can afford.

In addition, they claim that the legislature disbursed state
"bail-out" funds after Proposition 13 without regard to districts'
needs--exacerbating the disparities between rich and poor school
districts.

They are asking that the state be given one year to reach
100-percent compliance with the original court mandate. If, during the
one-year period, legislators are unsuccessful in equalizing per-pupil
spending, then the plaintiffs ask that a permanent injunction be issued
to prevent the state from disbursing money to schools.

The defendants, a group of state officials, claim that the gap
between rich and poor has been substantially reduced. Further,
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Calif. Finance Lawsuit Back In Court

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they argue that any further equalizing of spending will actually cause
more harm than good to many students in both rich and poor
districts.

More than 93 percent of the districts in the state are now within
the $100 "band" for per-pupil spending stipulated in the 1976 order,
the state says. Furthermore, the state's lawyers contend, the allowable
variation should be changed from $100 to $200 to account for inflation.
(The state's per-pupil average is now about $2,500, although a few
districts, primarily rural ones with unusually high expenses, spend up
to $3,000 or more.)

The equalizing that has occurred in the past several years has been
made possible by a process that has come to be called "leveling
down.''

Essentially, it means that in order to make per-pupil spending more
equal, large sums of money have been taken from wealthy districts and
given to poorer districts, thus reducing the average. (The original
intent of the court order was to give more money to poorer districts to
bring them up to spending levels already in place for wealthier
districts--an objective that was made unreachable by Proposition 13 and
the subsequent fiscal crisis it caused.)

Substantial Sums

Lawyers for the defendants, hired by the state department of
education with special funds, argue that further leveling down to bring
every district within that $100 band would require taking substantial
sums from already hard-hit districts to give a few dollars more to
slightly poorer districts.

Robin Johansen, of the San Francisco law firm defending the state,
cited a study showing that for every wealthy district that relinquishes
$500 to $800 per student, other less affluent districts would receive
only about $61 per student.

"It would be disastrous for a number of schools," she said."I don't
think there would be a corresponding benefit that would even come close
to making it worthwhile."

Furthermore, Ms. Johansen said, continued leveling down would hurt
many poor and disadvantaged children in so-called "high-wealth"
districts that already have experienced substantial cuts.

"It is clear by now ... that most high-revenue districts simply
can-not get by with less than they have now," a defense brief states.
"It is no longer a matter of cutting 'frills,' but a question of
shortening the class day and eliminating basic programs."

Perhaps the defense's best psychological weapon in the nonjury trial
is its list of witnesses--several superintendents from districts that
are considered high spenders but that argue they have been hurt by the
leveling down.

In addition, two nationally recognized experts on school finance,
Charles Benson and James Guthrie of the University of California at
Berkeley, both of whom testified for the plaintiffs at the original
trial, have testified that the further action requested by the Serrano
plaintiffs will hurt more than help California's four million
public-school students.

"I believe the differences in expenditures among school districts in
California are now insignificant," Mr. Guthrie said in an interview
last month. "Given declining enrollment, Proposition 13, and the
state's fiscal circumstances, I believe the state has made good
progress. While I think that progress should continue, I do not think
the system of school finance in the state of California can withstand
another wrenching change."

Mr. Guthrie acknowledged that there remain some districts that spend
well above the state average, but contended that any remedy would be
''either so costly or so punitive as to damage the youngsters in
them.''

"You'd either have to take away from high-spending districts or take
away from the state welfare budget," he added. "The pain is greater
than the advantage at this moment."

Not everyone, however, agrees with the defendants that equalization
has been achieved for the most part. "The state hasn't done as much as
you may have been led to believe," said Richard Rothschild, a lawyer
for the Los Angeles-based Western Center on Law and Poverty.

John McDermott, another lawyer for the plaintiffs and John Serrano's
lawyer during the first two trips through the courts, said high-wealth
districts have not been hurt that much.

He said state legislators have helped "bail out" high-spending
districts with a variety of special funds that he said have totaled
nearly $1 billion over the years.

"If a fraction of that had been spent on equalizing, we would have
had compliance by now," he said. "I think the burden [on districts
forced to level down to the average] has been imaginary. They've
actually done better than low-spending districts."

'Special Funds'

It is those "special funds" that have become the focal point in the
plaintiffs' case. In a separate brief filed with the Gonzalez suit, the
plaintiffs allege that the state has distributed revenues without
taking into account district wealth to stabilize funding for districts
that would otherwise lose money because of the Serrano decision.

Those funds, in many cases called "add-ons," include funding to
compensate for declining enrollment, certain summer-school programs,
meals for needy pupils, development centers for handicapped children,
and transportation and maintenance costs.

"By substituting state funds for lost property-tax revenues, the
legislature re-enacted and recreated the same spending disparities that
existed before Proposition 13," states the plaintiff's brief in the
Gonzalez case.

Furthermore, argued Mr. Rothschild, the plaintiffs' lawyer, those
add-ons are geared toward past spending formulas more than present
needs; he added that it "does not make a whole lot of sense to pay more
to some districts because a long time ago they had more property
value."

Ms. Johansen, however, described the somewhat sudden inclusion of
Gonzalez and its complex list of non-wealth-related revenues as
"novel.''

"Nothing in the plaintiff's prior pleading, the Serrano judgment
itself, or the decisions of the California Supreme Court implied in any
way that non-wealth disparities are unconstitutional," states the
defendants' brief.

Representatives on both sides agree that the Serrano/Gonzalez court
case, which is expected to continue through mid-February at the
superior-court level, in all probability will once again wind up in the
state's highest court.

Vol. 02, Issue 20

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